Porter Five Force Model of Primark Assignment

The business environment is the combination of internal and external factors that influence a business operation. It is the sum total of all the internal and external factors that can affect the business processes. Primark is a fast fashion retailer company which is based in London,  United Kingdom. The company is providing different clothing,  cosmetic products, accessories,  footwear,  beauty products, and housewares services to customers. One of the biggest Primark stores is located in Manchester, market street (Ali and  Khan, 2019).  The company is expanding its business across the world by collaborating with other local companies. >> Primark Porters Five Forces

PRIMARK

Table of Contents
INTRODUCTION...........................................................................................................................3
a. Porter five force model to identify and analyse the current environmental influence on the
Primark...................................................................................................................................3
b. Value chain model to analysis the internal business environment of Primark...................6
c. Appropriate adaptions that is undertaken in response to the macro and external business
environmental forces..............................................................................................................7
d. Reflection.........................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is the combination of internal and external factors that influence a
business operation. It is the sum total of all the internal and external factors that can affect the
business processes. Primark is a fast fashion retailer company which is based in London, United
Kingdom. Company is providing the different clothing, cosmetic products, accessories, footwear,
beauty products and housewares service to the customers. One of the biggest Primark stores is
located in the Manchester, market street (Ali and Khan, 2019). Company is expanding its
business across the world by collaborating with other local companies.
This file makes use of of Porter 5 force model to evaluate the competitive advantage of
the company in the present market situation of the United Kingdom. Along with it, the value
chain model is used to analyse the internal business environment of the firm in retail sector.
Identification of external business environment forces. Usefulness of Porter five force model in
understanding business environment. New entrants can decrease the profitability of other firms.
Differentiation of products and brand equity can affect the business of Primark.
a. Porter five force model to identify and analyse the current environmental influence on the
Primark.
Porter five force model is a tool to identify the impact of business environment(Ali and Khan,
2019).
 Threat of new Entrants-
Primark needs to understand that the company is having a risk of facing constant new
entrants in the market. This can make the company's suffering grow and would make it hard to
reach set goals and objectives. New entry of any small company can be easily archived in the
presence of Primark and marks and Spencer types of big companies. Today, small businesses
have seen to be affecting the growth of large companies such as Primark. The new entrants are
seen to be competing on the basis of location, convenience, speciality etc. there are many new
entrants have low cost of doing business compare by large business. All the small new entrance
can operate their fictions with low cost. Threat of new entrance shows that power can also
affected by the effectiveness and capability of the people in existing market. The companies
Potential competitors can be a threat of the big companies. (Stanković and Novaković, 2019).
The new entrants are posing a lot of threats including the threats of having new products
in the markets as per the fresh trends. It can make the company suffer from selling its own

products because they might get older with the new trends. The other threats includes that the
new entrants are having such products which are upscale and as per the present needs of the
consumers. It can make PRIMARK face issues related to growth and development of the
company and selling of its products.
New small companies enter in the new market with innovative ideas and new products.
Their new products and low cost can give the competition to the Primark. But company can save
its brand image by innovating new products rapidly. Company should low the cost of its clothing
products. This strategy can be helpful to overcome from the threat of new entrance. Price factor
and brand loyalty will not impact the threat of new entrance to the marketplace. It will be very
difficult process for the new entrants to build same brand image and reputation like
Primark(Calhoun, and Douglas, 2019).
 Threat of substitutes products
Substitute products is highly impacting the sector of the clothing manufacturers across
the world. It refers to the goods which are used in the place of another. In the theory of
consumers, the substitutes and substitute goods are the products which a consumer perceives as
comparable or similar. The market of the clothing sector is filled with companies which are
producing goods and services that are similar to the organisations which are huge and are
investing a lot in research and development. This threat is constant and is making the
organisations such as Primark to face a large number of challenges in selling of their products
and services (Calhoun and Douglas, 2019). The other threats which substitute products make the
organisation face is the challenge of earning the required profits set by the organisation in its
goals and objectives. It is also making the organization suffer and achieve better growth and
development.
Strategy-
1). Primark company can use the multiple suppliers to build efficient supply chain.
2). Primark company can change in the product design by using different material. It will help to
company to shift the new strategy of packaging products When prices goes very heigh of the
products.
 Supplier power
Impact of this force is very low. Suppliers are the main source of the company they can
share the manufacturing venues with other new companies. Suppliers relation can also affect

bitterly because after the factory scandal in Bangladesh suppliers are continuously developing
their relationships. Suppliers are not highly affecting the Primark clothing industry (Cook, 2017).
So suppliers have not big control on the clothing industry that means there power of bargaining
is significant.
Strategy-
1). Primark company can use the multiple suppliers to build efficient supply chain.
2). Primark company can change in the product design by using different material. It will
help to company to shift the new strategy of packaging products When prices goes very
heigh of the products.
 Bargaining power of the customer
This force not necessarily affect the business of Primark company. All the customers are
well informed about the alternatives they can choose several brands in the market. High level of
availability of different brand and competition helps to customer to choose any brand easily
fashion brands take a lot of investment behind the marketing strategy(Cook, 2017).
Company is also providing the Guilt free shopping which attracts customers by their low
prices, and the fashionable things attracts the people through sports and beauty ranges.
Customers’ needs and wants can be change any time. So, in the fashion retail industry,
bargaining power of the customer is a force(Daunton, 2015).
Strategy-
1). Primark company can build a large base of the customers it will help to reduce the
bargaining power of the buyers.
2). By innovating new products and service. Company can attract the customers thorough
introducing new products because new product can reduce the defection of existing
customers of the other competitors of the company.
 Competitive Rivalry
It is one of the biggest forces which can affect the business of the Primark company.
There are many competitors of Primark company and they can attract the same targeted
customers of the company. Different other competitors are not focusing on the price of their
products so they can affect the future profit of the Primark(Dcosta, and McDonough, 2015). The
competitive rivalry is one of the major factors which tends to make the organization suffer. The
industry is having major clothing retailer such as Marks and Spencer, Zara, Primark etc. These

retailers are the ones which could make the organisations working under the industry face both
competitive advantage and disadvantage as per their basis of selling products and services. In
order to ensure this, it has become important for the organization to
Strategy-
1. Primark company can build sustainable differentiation. To keep their product different
from other companies.2
2. Company can build a scale for every department so they can work more effectively.
3. Company can collaborating with other local companies to expand its business.
b. Value chain model to analysis the internal business environment of Primark.
There are two types of activities in value chain-
Primary activities.
Inbound logistics- Primark is expanding its business across the world to keep its clothing
price lower from other competitors. Primark company is focusing on the inventory management
and supply chain management to manage the supply cost. Primark company is using new
applications and technologies to maintain inventory and supply of material which helps to keep
lower price of the clothes (Daunton, 2015). Primark company is maintaining the relationship
with its suppliers for keeping price low and for efficient sourcing.
Operations- Primark is operating across 12 countries. Company is growing rapidly just
because of the price of products. Demand of the customers are very high. Primark has 350 stores
across the world. Biggest Primark store is located in the Manchester. Company has 47 stores in
Spain (Dcosta and McDonough, 2015). Company is mainly operating the 190 stores in the UK.
So overall company has 370 stores in 12 countries.
Marketing and sales- it is one of the pricing strategies used by the company. The Lower
product price helps in building the company's reputation. The company is making use of a
variety of marketing strategies to expand its business. These strategies includes the usage of,
social media, campaigning etc. All this marketing strategies helps to create better reputation in
the market(Ruziwa, 2015).
 Support activities
Technology- Primark is using a Database management system to keep centralise all the
functional units in the company. It will help to access the information of other department. Each
and every information is stored under the centralised system. This includes the buying habits of

the customers and their likes and dislikes (Gendron, 2019). Along with it, the system tends to
help the company in evaluating in what manner the organisation needs to build required
strategies in order to achieve set growth and development and ensure that appropriate selling and
buying is taking place.
Human resource management- it is an integrated management system. It is responsible
for planning, recruiting, directing, training and development etc. HRM of Primark is
implementing new strategies to recruit new employees of marketing for selling their products.
HRM of Primark is responsible for the activities of other functional groups such as – finance, IT,
production (Recica, and et.al., 2019). The human resource management of the organization tends
to understand in what manner the needs and requirements of the organization can be fulfilled.
This tends to help the organisation in ensuring that appropriate achievements are being ensured.
It is one of the most important requirement of an organization to ensure that proper development
and growth is being ensured. The HRM and its practices to fulfil the needs and requirements of
the organisations stakeholder ensure proper growth and development.
Procurement- Primark has managed the relationships with suppliers to keep lower cost
of material. The organisation tends to make use of the finest suppliers in the Europe in order to
ensure that appropriate raw materials are being used within the organisation. It is one of the
biggest requirement of the organization to ensure that appropriate raw materials are being used to
produces its products and services. This can ensure that the organization is achieving set growth
and appropriate development is taking place.
c. Appropriate adaptions that is undertaken in response to the macro and external business
environmental forces.
PRIMARK PESTEL ANALYSIS
PRIMARK is one of the largest fast fashion retailers headquartered in Dublin, Ireland.
The company is located in 368 locations worldwide. The products sold by PRIMARK include
clothing, cosmetics, and housewares. Below mentioned is the PESTEL analysis of the company
discussing the macro environmental factors impacting the company's environment on both small
and large scale(Stanković, and Novaković, 2019).
 Political Factors: The political restrictions also make the company spend less on
research and development which later makes the organisation unable to understand the
needs of its consumers in the particular area it is serving. If these needs are not

understood well it can make the company suffer from lack of profitability and its
competitors flourish. Other political factors impacting the company include the recent
trade war between China and India. This has resulted in making the economies of both of
the countries suffer. United States is one of the largest markets of PRIMARK. The
impacted economy has fluctuated the people of United States preferences in buying
clothes and this has impacted the overall company's profitability and business.
 Economic Factors: The recent recession has impacted the success of the company
greatly. It has made its consumers to look for cheaper options. Today, these consumers
preferences has been moved towards its competitors which are providing clothes that are
cheap and affordable (Ruziwa, 2015). As per the Mintel report of 2013, it has been
observed from mobile and online retailing that 79% of households has cut back their
spending, which suggests that now the consumers are more conscious of their spending.
Along with it, the rise in labour costs due to the increase concern for Shareholder's
welfare are some other economic changes that the company is facing. It has made the
organisation to understand and learn the market needs of consumers again as well as to
understand the needs and demands of its stakeholder in order to fulfil their requirements.
 Social Factors: Changing trends between different types of consumer bases is making
the company do constant research on finding what's new. The constant changes make it
hard for the PRIMARK to focus on building a product that establishes a long-term
production and supply. This in terms make the company to constantly look for raw
materials which can produce suitable clothing for these new consumer trends. Along with
it, technology and internet has made it easy for consumers to buy products online, which
provide them with a lot of choices of the company and its competitors’ products as well.
This is both good and bad for the company's sales, and to deal with the bad part the
company has to do constant marketing of its products to attract more consumer markets.
Also, there has been an increase in learning of skills such as sewing and cloth-making
which is making the consumers to produce their own clothes rather than buying them
from any other place. People today have become more aware of recycling and are leaned
towards sustainability which is making them look forward towards clothes that are made
keeping these things in mind and are more environment friendly. It is making PRIMARK
susceptible to critique for its low prices(Sungau, 2019).

 Technological Factors: People today have started using mobiles and internet more to
shop their clothes, amenities etc. online. The majority of people today tend to look for
options that help them with easy shopping and home delivery and technology has started
playing a major role in it. It is making PRIMARK to look for option which provide their
consumers with these changes in the technological needs. Technology such as Twitter
and Blogging platforms has made fashion trends easy to understand for the people that is
making them inclined towards fast fashion. It is an opportunity for PRIMARK to attract
these consumers and sell their products (Stanković and Novaković, 2019). The
technology has also made it easy for consumers to learn and understand new trends easily
which in order is creating awareness about new products and accessories they can buy to
fulfil their needs and requirements. PRIMARK after understanding these trends is making
the products required and selling them accordingly.
 Ecological Factors: Ecological factors such as increasing awareness in people's minds
about sustainability and recycling is making PRIMARK suffer. The company produces
products which comes in the category of fast fashion and these products are produced to
serve consumers which are looking for products that are cheap and affordable. These
consumers today are becoming more aware of the environment factors such as global
warming and rising temperatures and while buying any commodity they choose for
options which are sustainable and environment friendly. PRIMARK is shifting its focus
on creating products which are environment friendly while keeping in mind the needs and
requirements of these consumers along. It has become to company to look for other
options to gain these consumers back and to save itself from profitability losses(Trad, and
Kalpić, 2019).
 Legal Factors: It makes the company to open it stores on location which are expensive
and needs a lot of investment. Along with it, the health and safety laws deters the
company to sell its product in many places because of the health preferences of the
people. Along with it, import/export laws makes the company to pay the required taxes
on the products which are being imported and exported in and out of the country. Strict
legal implications implied by the governments of some countries makes it difficult for the
company to do its research and development to understand the market demands and
consumer preferences(Wang, Senaratne and Rafiq, 2015).

The above explore PESTEL analysis explains different macro environmental factors that impacts
PRIMARK and overall organisational environment.
d. Reflection
From the above description, I have analysed that porters five forces model plays
significant role in order to gain competitive advantage (Sungau, 2019). Thus, there are many
challenges that has been faced by company so this tool when used helped me in determining
principal of competitive influence in a particular market (Dcosta and McDonough, 2015).
Usefulness
 While taking competitive rivalry force into consideration, I determined about the strength
of competition that is available in a particular market or industry. Thus, Primark has to
build sustainable differentiation in terms of product and keep it different from that of
competitors.
 By putting threat of substitution into consideration, I analysed about that extent to which
various products and services can be used by competitors in our own place. This also lead
me in analysing that Primark has to understand requirements of customers and
accordingly provide services.
 It also helped me in analysing threat that may arise due to new entrants and accordingly
adjust strategies that may use in order to suit competitive environment and also in
improving potential profit.
 The result of this analysis helped me in collecting strengths, weakness, opportunities and
threats and also in collecting strategies that can be used by company in order to earn huge
profit.
 I also identified that bargaining power of buyers and also of suppliers may affect the
ability in order to raise prices and also to manage cost in respected manner.
 I learned one most important thing that low entry barriers mainly attracts new
competition and high entry barriers discourage it.
Limitations
I identified that I was unable in taking new business models into consideration and also
dynamics related to markets (Ruziwa, 2015). Thus, if there occurs any kind of complexity in
industry that it becomes difficult and harder in drawing conclusions for this model.

CONCLUSION
From the above study it has been summarised that there are various external force which
are affecting Primark. The report also included value chain analysis for examine the internal
business environment of the company. In addition to this, company is adopting the
recommendations of external business environment forces. This file also discussed about the
usefulness of Porter five model to understand the potential limitations and business environment.

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